“Cost Realism”?

Nasty little bit of CIA business spilled into public Wednesday when those green-eyeshaded meanies over at the Government Accountability Office rapped Langley’s knuckles for favoring one contractor over another.

It seems the agency, seeking accounting and financial services for the Office of the Director of National Intelligence (is this something the CIA should be contracting out?) was charged with playing favorites.

KPMG of McLean, Va., complained that the agency, in awarding the contract to Deloitte & Touche of Arlington, Va., “held misleading discussions, misevaluated the proposals, failed to conduct a proper cost realism analysis, and made an unreasonable source selection decision,” according to the GAO’s summary of the bid protest. The GAO said KPMG had a point, and the GAO is encouraging the CIA to recompete the contract.

Try to follow this bait-and-switch on the cost-realism claim, according to the GAO:

Agency failed to conduct an adequate cost realism analysis of proposals for cost-plus-fixed-fee level-of-effort contract where the record is devoid of any meaningful analysis by agency evaluators of their basis for accepting as realistic the awardee’s cost proposal, and record showed that, beginning a year into performance, the firm’s cost savings depended on replacement of staff whose resumes were relied upon for the awardee’s higher technical ratings.

Nifty. Too bad they got caught. But if cost realism at the time of the contract award constitutes grounds for tossing it out, the nation would today be shivering naked and undefended, with few tanks, warships or airplanes in its arsenal.